Mon. Jan 20th, 2020

Current Trend: Public Service Enterprise Group (NYSE: PEG)

41 min read

Public Service Enterprise Group (NYSE: PEG) stated newly Net Income for the 3rd-quarter of 2k19 of $403.00M, or $0.790 for each share as a contrast to Net Income of $412.00M, or $0.810, in the 3rd-quarter of 2k18.

Non-GAAP Operating Earnings for the 3rd-quarter of 2k19 were $495.00M, or $0.980 for each share, a contrast to non-GAAP Operating Earnings for 3rd-quarter 2k18 of $481.00M, or $0.950 for each share.

Ralph Izzo went on to say, “Strong results at PSE&G assisted to offset the decline at PSEG Power that resulted from lower power prices.  We are narrowing our forecast of full-year, non-GAAP Operating Earnings to $3.200 to $3.300 for each share from the prior $3.150 to $3.350 for each share.  We are affirming the mid-point of 2k19 full-year guidance, and updating the contribution ranges from PSE&G and PSEG Power to reflect our financial results through the 1st-three quarters of the year.

Utility earnings continue to benefit from rate relief and a mid-year change to the pension plan has turned up PSE&G’s expected full-year results above the upper end of PSE&G’s original guidance range to $1,225.00M – $1,250.00M.  Weak power prices have negatively influenced PSEG Power’s results toward the lower end of the original guidance, which has been updated to $395.00M – $420.00M.  Guidance for Enterprise/Other is also updated to $5.00M.”


PSE&G stated Net Income of $344.00M ($0.680 for each share) for the 3rd-quarter of 2k19 contrast with Net Income of $278.00M ($0.540 for each share) for the 3rd-quarter of 2k18.

The incline in PSE&G’s Net Income for the 3rd-quarter reflects expanded investment in transmission and distribution investment programs, rate relief, and changes to pension plans that had a favorable impact in the quarter.

PSE&G’s growth in transmission investment added $0.060 for each share to quarter-over-quarter Net Income comparisons.  The incline in transmission included a $0.010 for each share positive adjustment for the 2k19 estimated year-end true-up booked in the quarter.  The electric margin was $0.030 higher than the year-ago quarter, driven by rate relief and higher weather normalized volume.  Gas margin was $0.030 higher than the prior-year quarter driven by rate relief.

Weather was lower by $0.010 for each share contrast to the significantly warmer summer practiced in 2k18’s 3rd-quarter. A boost in depreciation and interest cost of $0.010 for each share each, related to PSE&G’s expanded capital base, reduced Net Income comparisons as compared to the prior year’s 3rd-quarter.

The effective tax rate for the quarter recorded based on the average annual effective tax rate, resulting in a positive $0.010 for each share impact. This is the result of timing between quarters, is related to the flow back of excess deferred taxes, and will reverse in the 4th-quarter.

The New Jersey economy continues to experience positive growth in employment, as evidenced by the lowest unemployment rate in the last twenty years.  PSE&G reached a 2k19 system peak of 9,753 MW this past July contrast to 2k18’s system peak of 9,978 MW.  The temperature-humidity index, which is used to measure the impact of summer weather on sales, was 10.00 percent lower in the 2k19 3rd-quarter than one year ago, but nearly 12.00 percent higher than normal summer.  Weather normalized sales for the trailing 12 months, which provides longer-term trending data, remained relatively flat for electric and was 1.0 percent higher for gas.  Residential electric and gas customer growth continues to trend higher at about 1.0 percent for each year.

In October, PSE&G filed its annual transmission formula rate update with the Federal Energy Regulatory Commission.  Residential customer bills will incline by about 2.0 percent, reflecting turned up investment in transmission, changes in cost allocation and the completion of certain tax flow backs to customers which occurred in 2k19.

PSE&G received final NJBPU approval of its Energy Strong II settlement in mid-September and will begin investing under this electric and gas resiliency enhancement program starting in the 4th-quarter of 2k19 and extending over the coming four years.

PSE&G invested about $2.00B for the nine months finished September 30 in electric and gas transmission and distribution capital projects.  For the year, PSE&G anticipates to invest $2.70B of capital in its infrastructure.

PSE&G’s Net Income for 2k19 has been updated to a range now forecast to be $1,225.00M – $1,250.00M.

PSEG Power

PSEG Power stated Net Income of $53.00M ($0.100 for each share) for the 3rd-quarter of 2k19 contrast with Net Income of $125.00M ($0.250 for each share) for the 3rd-quarter of 2k18.  PSEG Power’s non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA for the 3rd-quarter of 2k19 were $145.00M ($0.290 for each share) and $322.00M, respectively, contrast to non-GAAP Operating Earnings of $194.00M ($0.390 for each share) and non-GAAP Adjusted EBITDA of $360.00M for the 3rd-quarter of 2k18.  PSEG Power closed on the sale of its interests in the Keystone and Conemaugh generating plants throughout the 3rd-quarter, which resulted in a pre-tax loss of $402.00M in the nine months finished September 30.

PSEG Power continues to forecast output for 2k19 of 57 – 59 TWh.  The remainder of expected production for the year of 13 – 14 TWh is hedged at an average price of $37.00 for each MWh.  PSEG Power has hedged about 85.00 percent – 90.00 percent of 2k20’s forecast output of 52 – 54 TWh at an average price of $37.00 for each MWh.  For 2k21, PSEG Power has hedged 40.00 percent – 45.00 percent of forecast output of 52 – 54 TWh at an average price of $35.00 for each MWh.  The forecast for 2k19 – 2k21 volumes includes generation associated with the production of 1,800 MWs of CCGT capacity at Keys, Sewaren and Bridgeport Harbor 5, lower volumes consistent with current market conditions, and reflects the sale of PSEG Power’s interest in the Keystone and Conemaugh generating units throughout the 3rd-quarter of 2k19.

The updated forecast of PSEG Power’s 2k19 non-GAAP Operating Earnings is $395.00M – $420.00M, and the updated guidance for PSEG Power’s non-GAAP Adjusted EBITDA has been lowered to $1,000.00M – $1,050.00M, from our original guidance of $1,030.00M – $1,130.00M.

PSEG Enterprise/Other 

PSEG Enterprise/Other stated Net Income of $6.00M ($0.010 for each share) for the 3rd-quarter of 2k19 contrast to Net Income of $9.00M ($0.020 for each share) for the 3rd-quarter of 2k18.  The decline in Net Income year over year reflects higher interest cost at the Parent.

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